Boris Johnson ignores pleas as firms hit with maximum Crossrail tax

Thousands of London firms will see their business rates increased by a minimum of £1,100 a year after Boris Johnson decided to press ahead with the maximum possible levy to help fund Crossrail.

The Mayor has rejected pleas to ease the introduction of the levy, which will be imposed for up to 31 years from April across all 33 boroughs, to avoid placing extra costs on businesses struggling to recover from the recession.

But Mr Johnson has exempted a further 4,000 small firms from the fee by raising the rateable value threshold of businesses eligible for the charge from £50,000 to £55,000.

The fee, which will help fund £4.1 billion towards the £15.9 billion commuter line, will be paid by 46,500 medium and large firms — half based in Westminster, the City or Canary Wharf. Around 80 per cent of London firms will be unaffected.

Mr Johnson said he was "acutely aware" of the effect of the recession, but the funding for Crossrail "must be protected". There remains the fear that the line could fall victim to a cost-cutting Tory government.

The line will run from Maidenhead and Heathrow in the west to Shenfield and Abbey Wood in the east. It is due to open in 2017 and will boost London's rail capacity by 10 per cent.

Mr Johnson said: "I cannot overstate the importance of this rail project. The Tube and rail network will heave a huge, collective sigh of relief as breathing room is created on previously packed-to-capacity commuter lines."

City Hall estimates that around 23,000 of the firms paying the charge will pay £2,500 or less each year. Charities and sports clubs will pay 20 per cent. The levy will also be imposed on empty buildings.

Initially the Mayor only planned to impose the charge on 41,000 firms but a revaluation increased the rateable values of thousands of firms, taking them above the £55,000 threshold.

Business groups welcomed the Mayor's decision. Baroness Valentine of London First, which represents the capital's leading businesses, said: "This small concession shows he has listened. It's not as much as we would have liked — we would have preferred a small concession for all contributors — but it does demonstrate that Boris is sympathetic to our concerns."